Clothing Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 35,400 clothing retailers in the US generate revenue by selling a variety of apparel and apparel-related products to consumers. Clothing stores sell primarily new clothing, and may specialize in a particular category, such as men, women, children, infants, families, or accessories. Family clothing stores account for 57% of industry sales. Women’s clothing stores are 19%; other specialty stores are 20%, and men’s clothing stores are 4%.
Seasonality of Demand
Most clothing stores experience major seasonal fluctuations during the winter holiday and back-to-school periods.
Trends and Fads Rapidly Change
The clothing industry is in a constant state of change, driven by fashion trends and fads.
Industry size & Structure
The average clothing retailer employs fewer than 25 workers and generates $6 million annually.
- The clothing retail industry consists of about 35,400 companies that employ 852,000 workers and generate about $225 billion annually.
- Family clothing stores account for 57% of industry sales. Women's clothing stores are 19%; other specialty stores are 20%, and men's clothing stores are 4%.
- The industry is concentrated at the top, and highly fragmented at the bottom. The top 20 firms account for 55% of industry sales.
- The average independent clothing retailer operates out of a single location, employs fewer than 10 workers, and generates between $300,000 and $900,000 annually.
- The industry includes national chains, regional chains, and independent retailers. Some large apparel manufacturers have retail operations.
- Large companies include TJX Companies (TJ Maxx, Marshalls), The Gap, Victoria's Secret & Co., American Eagle Outfitters, and Ross.
Industry Forecast
Clothing Stores Industry Growth
Recent Developments
Jul 8, 2024 - Sales Jump in May
- Clothing and accessories store sales grew 6.2% unadjusted year over year in May 2024, supported by solid consumer spending, according to the CNBC/NRF Retail Monitor released by the National Retail Federation. The category was up 1.4% seasonally adjusted month over month. Total retail sales, excluding automobiles and gasoline, increased 3% unadjusted year over year in May 2024 and 1.3% seasonally adjusted month over month. Five out of nine retail categories were higher in May compared to a year ago, led by online sales, health and personal care stores, and clothing and accessory stores. According to NRF President and CEO Matthew Shay, “Consumers have clearly retained their ability to spend and are driving solid economic growth. Spending is being supported by the job market and real wage gains.” The CNBC/NRF Retail Monitor uses actual, anonymized credit and debit card purchase data compiled by Affinity Solutions.
- Parents plan to spend 22% more on back-to-school shopping in 2024 compared to a year ago, with Walmart, Amazon, and Target as the top destinations, according to a new JLL survey of 1,026 parents in Retail Dive. Parents expect to spend $475 per child in 2024 compared to $390 in 2023. While parents in most income brackets plan to spend more than last year, parents earning less than $50,000 are expected to decrease their budgets due to inflation concerns and seek out sales and coupons. Higher-income parents are turning to private labels to save money during their back-to-school spending. Wealthier households (earning over $150,000) are increasing their budgets the most. The stores shopped at the most for back-to-school are Walmart (46%), Amazon (35%), and Target (32%), while other major destinations include Costco (6.5%), Old Navy (3.8%), and Dollar General (2.8%). About a quarter of shoppers have already started their back-to-school shopping, with another 22% beginning shopping in June, 20% in July, and almost 17% in August.
- Several longtime mall clothing chains filed for bankruptcy in the spring of 2024. Teen retailer Rue21 filed for Chapter 11 bankruptcy protection in May 2024 and plans to close its 540 store locations, according to Sourcing Journal. The filing, the company’s third, cited underperforming stores, industry competition, online shopping growth, and macroeconomic headwinds as contributing to the financial downturn. Express filed for Chapter 11 bankruptcy in April 2024, with plans to close at least 18% of its 584 stores. The underperforming company has tentative plans to sell the company to WHP Global, a group that includes some of the same buyers who acquired department-store chain JC Penney from bankruptcy in 2020. The company cited distress brought about by the pandemic and headwinds facing the retail industry as contributing to losses. Both retailers had been on the mall scene for decades. Rue21 was founded in 1970, and Express was founded in 1980. In addition, Ted Baker retail operators in North America filed Chapter 15 bankruptcy in May 2024, which will affect 34 retail stores in the US and 25 stores in Canada, according to Retail Dive.
- A new UBS report in Retail Dive forecasts that 45,000 retail stores may close in upcoming years as online sales gain share. Online retail penetration is expected to rise to 26% from 21%, with retail sales growth of 4% by 2028, as the industry focuses more on fulfillment and distribution centers. If the closures occur, USB said the total number of stores in the US will fall from 958,533 to 913,500. Other factors driving store closures include a tighter lending environment, higher operational costs, and consumers spending more on services than goods. The report stated that sporting goods, clothing, consumer electronics, home furnishings, hobby, book, and music stores have closed the most locations since the first quarter of 2019. Still, retailers can incorporate existing stores as an important piece of their omnichannel capabilities. Per the report, “Our analysis assumes that stores remain an important part of the overall retail ecosystem for retailers and consumers. In the simplest terms, stores serve as hubs of fulfillment and support distribution logistics. This is increasingly more important as consumers are becoming more demanding for convenience or immediate deliveries.”
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